Panetta detailed President Barack Obama’s fiscal 2013 defense budget request, which puts the department on the road to reduce spending by $487 billion over the next 10 years.

Along with Army Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, Panetta told the senators that the Pentagon is ready to do its part in reducing the record deficit. But the secretary, who has federal budget experience going back to the 1960s, had a warning for the committee.

“No budget can be balanced on the back of discretionary spending alone,” he said. “Based on my own budget experience, I strongly believe that all areas of the federal budget must be put on the table -- not just discretionary, but mandatory spending and revenues. That’s the responsible way to reduce deficits and the responsible way to avoid ‘sequester’ provisions contained in Title 3 of the Budget Control Act.”

Sequestration would mandate another $500 billion in cuts over nine years from defense alone. The secretary called the provision a “meat ax” approach to fiscal policy, and said it would cause tremendous harm to America’s national security posture.

“These cuts would, in fact, hollow out the force and inflict severe damage to our national defense,” he said. Panetta stressed that it is not a question of choosing between fiscal responsibility and national security.

“While I understand the differences, there should be consensus on one thing: that the leaders of both the legislative and executive branches of government have a duty to protect both our national and fiscal security,” the secretary said. “I fundamentally do not believe that we have to choose between fiscal discipline and national security. I believe we can maintain the strongest military in the world and be part of a comprehensive solution to deficit reduction.”

The president’s proposal does that, he said. Dempsey agreed.

“This budget represents a responsible investment in our nation’s security,” the chairman said. “It strikes a purposeful balance between succeeding in today’s conflicts and preparing for tomorrow’s. It also keeps faith with the nation and with the source of our military’s greatest strength, … America's sons and daughters who serve in uniform.”

The proposal is firmly based in strategy, Dempsey said, noting that the Defense Department conducted a strategy review and used its conclusions to inform all budget decisions. Even without fiscal constraints, he told the panel, the department would have performed this new strategy review to incorporate the lessons of 10 years of war.

The military is at a strategic turning point, Panetta told the senators.

“We agreed that we are at a key inflection point,” he said. “The military mission in Iraq has ended. We are still in a very tough fight in Afghanistan. But 2011 did mark significant progress in trying to reduce violence and transitioning to an Afghan-led responsibility.”

A responsible cut considers the changes in the world, the secretary said, including operations that resulted in deposing Moammar Gadhafi in Libya and counterterrorism operations around the world that have decimated al-Qaida. “But even though we have had these successes,” he added, “unlike past drawdowns where threats receded, we still face an array of security challenges.”

Panetta noted that U.S. troops are in combat in Afghanistan, and that terrorists remain a problem in Pakistan, Somalia, Yemen and North Africa. “There's still a proliferation of weapons of mass destruction in the world,” he said. “Iran and North Korea continue to undermine stability in the world. There is continuing turmoil in the Middle East.”

Rising powers in Asia and growing concerns about cyber intrusion and attacks also must be dealt with, Panetta said. “We must meet these challenges,” he told the senators. “We must meet these threats if we are to protect the American people.”

Panetta recited the guidelines used to form the budget, a recitation he said is fast becoming a mantra to him. “No. 1, we wanted to maintain the strongest military in the world,” he said. “No. 2, we did not want to hollow out the force. And lastly, of course, we didn’t want to break faith with the troops and their families, those that have had to be deployed time and time and time again over 10 years of war.”

The defense funding request is for a baseline budget of $525.4 billion for fiscal 2013 and an additional $88.5 billion in war funding. The $487 billion in savings over 10 years comes from four areas of the defense budget: efficiencies, force structure reductions, procurement adjustments and compensation, Panetta said.

The secretary told the senators that the force of the future will be smaller and leaner, but more flexible, more agile and more technologically advanced.

“In order to ensure an agile force, we made a conscious choice not to maintain more force structure than we could afford to properly train and properly equip,” he said. “We are implementing force structure reductions consistent with the new strategic guidance for a total savings of about $50 billion over the next five years.”

The Army will go from 562,000 to 490,000 soldiers by 2017. The Marine Corps goes from about 202,000 to 182,000 Marines.

“We’re reducing and streamlining the Air Force’s airlift fleet,” Panetta said. “In addition, the Air Force will eliminate seven tactical air squadrons but retain a robust force of about 54 combat fighter squadrons and enough to, obviously, maintain air superiority and strategic airlift that we need.” The Navy will retire seven cruisers that have not been upgraded with ballistic missile defense capability, he added.

The strategy calls for the department to focus on the Middle East and the Asia-Pacific region, Panetta said. “To this end,” he told the panel, “the budget does maintain our current bomber fleet. It maintains our aircraft carrier fleet. It maintains the big-deck amphibious fleet that we need. And we do enhance our Army and Marine Corps force structure presence, both in the Pacific, as well as in the Middle East.”

But the United States is a global power, and American presence is needed in all regions of the world, he said. “We recommend building innovative partnerships and strengthening key alliances and partnerships in Europe, in Latin America and in Africa,” he added. “This strategy makes clear that even though Asia-Pacific and the Middle East represent areas of growing strategic priority, the United States must work to strengthen its key alliances, to build partnerships.”

Defense planners are looking at rotational deployments to sustain a U.S. presence elsewhere in the world, the secretary said.

The world is uncertain, and the strategy calls for a military that can confront and defeat aggression from any adversary, any time and anywhere, Panetta said.

“We have to have the capability to defeat more than one enemy at a time,” he said. “In the 21st century, we have to recognize that our adversaries are going to come at us using 21st century technology. So we must invest in space, in cyberspace, in long-range precision strike capabilities and in special operations forces to ensure that we can still confront and defeat multiple adversaries.”

But it all comes back to trying to cut the deficit on the back of defense, Panetta said, getting a bit heated in discussing this aspect.

“This Congress proposed, as part of the Budget Control Act, a trillion dollars in savings off the discretionary budget,” he said. “You can’t meet the challenge that you’re facing in this country by continuing to go back at discretionary spending. That’s less than a third of federal spending.

“Now, … if you’re not dealing with the two-thirds that’s entitlement spending, if you’re not dealing with revenues and you keep going back to the same place, frankly, you’re not going to make it, and you will hurt this country,” he continued. “You’re going to hurt this country’s security not only by cutting defense, but very frankly, by cutting discretionary spending that deals with the quality of life in this country.”